Dollar Dips on Trump Tariff, Gold Creeps Up

Gold prices rose slightly on Friday as the American dollar eased on fears of an imminent trade war, this, following President Donald Trump's decision to impose steep tariffs on imported steel and aluminium.

Spot gold rose by 0.1% to $1,317.29 U.S. an ounce overnight Friday in North America, but was on track for a second straight weekly drop after having declined 0.9% so far.

Prices fell to the lowest since Jan. 2, at $1,302.61 U.S., in the previous session under pressure from expectations of more interest rate hikes in the United States than expected this year. U.S. gold futures prospered 1% to $1,318.5 U.S. per ounce on Friday.

The dollar index, which measures the greenback against a collection of major currencies, shed 0.1% at 90.233, having lost 0.4% overnight, pulling back from a six-week high of 90.932 touched early on Thursday, after Trump's decision.

The Trump administration said the tariffs would protect U.S. industry, but the dollar and Wall Street shares slumped as the plan sparked fears of a trade war and worries about its potentially negative impact on the world's largest economy.

Meanwhile, Federal Reserve Chairman Jerome Powell said on Thursday there was no evidence the U.S. economy is overheating, and labour markets may still have room to improve as the central bank sticks with a gradual pace of rate hikes.

A stronger dollar and higher interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies.

In other precious metals, silver was down 0.3% at $16.41 U.S. an ounce after touching its lowest in over two months at $16.16 U.S. in the previous session.

Platinum was 0.3% lower at $963.40 U.S. per ounce after falling to its lowest since Jan. 4 at $950.50 U.S. on Thursday.

Palladium fell 0.5% to $984.30 U.S. after recording its biggest one-day percentage fall of 5.1%since Jan. 25, 2017, in the previous session.